Ascendis Pharma A/S (ASND) Earnings Call Transcript & Summary

Okay. Let's go ahead and get started. This is the fireside chat with Ascendis Pharma. Thank you for joining us. Before we get started, I need to read a brief disclosure statement. For important disclosures, please see the Morgan Stanley user's disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representatives. And I'll turn it over to Tim Lee from Ascendis Pharma to read disclosures from their standpoint.

Thank you. We may make forward-looking comments during this presentation. Actual results may differ materially from those expressed or implied and you should not place undue reliance on these statements. For information concerning the factors that can cause actual results to differ materially, please see the Risk Factors section of our most recent Annual Report on Form 28. Now before I turn it back over to Vikram, I want to make a comment regarding our U.S. regulatory status of TransCon PTH. Jan provided a status update during our second quarter call last week and we are not in a position to make additional comments beyond that. Vikram, back to you.

Sure. Happy to have with me, Jan and Scott from Ascendis. Thanks for joining us. Appreciate it. So quite a lot to cover in roughly 30 minutes. Before I go into any specific pipeline programs, do you both want to just take a minute and just go over what you think have been some of the key inflection points for the business throughout the year, just to kind of set the stage for everyone in the audience.

I think we did that in our Q2 release. We set the state that we in January 29 came out with our Vision 20/20, how we want to be a sustainable leading biopharma company. Later on, the work probability came into the statement. We build that into it. The cornerstone what that was to get the 3 independent product approved in our rare disease endocrinology pipeline. We achieved that with SKYTROFA in '21. And you're sure we will talk a little bit more about SKYTROFA later about how we want to develop that to a blockbuster. We got and we hope to expect to get PTAs approved in '23 and we lay out our pathway for our TransCon CNP, a treatment for achondroplasia, really addressing the comorbidities. We laid that out, we will expect to get approval to 2025. So what we're doing is fulfilling our vision how to build a sustainable leading biopharma company. All our product opportunities is built on our TransCon technology platform. Because we are a platform company, we also have applied the TransCon technology outside our rare disease endocrinology. And we have programs now in oncology product opportunities where we both have [ a sheet to accommodate ] Phase II, both at single agent, but also in combination with checkpoint inhibitors. We are now in what I call the [ final ] state, the late states where we will get data in '24 of 7 independent indication where we go into cohort [ much more homogeneous ], really can see the effect on it. We can potentially talk more later on that. We also applied the TransCon technology in ophthalmology. And what we are doing, we are basically trying to see how we can create value to help patients with the TransCon technology also in areas outside rare disease endocrinology but to be our focus has always been on rare disease endocrinology. This is where we started the company. We said, hey, we really can take from idea states to clinical development out to the patient now when we're building up a global commercial infrastructure to really get it out to the patients. Scott, do you have anything?

I think that's it.

Great. Okay. So fully understood that you're not in a position to be able to comment on regulatory discussions with TransCon PTH, but could you just level set for the audience, I'm sure most people are familiar, but just in case, just remind us kind of what the central issue was that led to the concern from the agency? And where are you right now as of your 2Q '23 update? And then we can go from there.

Yes, what I can do, and I think Tim came with some statement in the beginning. And I'd say the statement said a lot about where we are in the regulatory interaction with FDA. I can give you the background that we disclosed at our CRL. We got the CRL reflecting to the ability in delivered dose. And you can say, what does that really mean, that is meaning when you have 2 control strategies typical in delivered dose, is one is drug content, the other one is dose accuracy. Drug content is mainly the -- you can say, the content of your active drug in different batches. Dose [ ecos ] is basically the [indiscernible] in our case, how well are you precise delivering a dose. And then you can say the highest dose in block content multiplied with the highest dose volume, give some concentration of delivered dose. If you take the lowest drug content, the lowest dose volume and then you have the lowest. And then there can be a theoretical risk that you can see their ability when you go for one bench to the other bench. That is basically the controlled strategy that was discussed in our CRL. That has never been raised any issue related to our efficacy and the safety that had been seen in our clinical trial, this is why we still have ERP programs that it's running in Europe enrolling in U.S. When you go back and look on, they are concerned, what can this dose viability raised as a concern. It could be an incident of hyper or hypercalcemic episode. Today, when we look on all the patient data, we basically are in a position that we're really providing [ and ] treatment to the patient with hypopara that we basically are taking the incident of hypo and hypercalcemic episode down to an extremely low level. So when you take the holistic view is why we have not seen any concern in Europe or anything like that. We have not been raised this issue in Europe because we have taken from a holistic perspective is that to basically eliminate or use issue for this patient. If you get a little bit back again in [hyperglycemic] is acceptable because the only way we can titrate the patient that 15% to 20% of the patients that really need a titration on it. At the same time, we're providing so many other benefit to the patient, not only in normalization of phosphate level or anything like that, also kidney function. And perhaps, why people really are so adherent to the therapy, the quality of life they're getting outside. They are feeling normal again. They're feeling they can fulfill day-to-day function, which they couldn't do on an untreated by not having the normal physiological level of PTH. So we will do everything we can do in the health with the patient organization, really also get this product up to the U.S. patients because they really deserve to get it.

Okay. Understood. And I'll ask you one final, promise, question on TransCon PTH in the U.S. I'm not sure if you're in a position or if you want to answer this, but in terms of public disclosures, is the planned October submission, is that likely to be the next public disclosure? Or could there be some interim updates between now and then based on how interactions go with the agency?

This is not a question to me. This is for Scott.

Yes, I would expect we would update when we resubmit the NDA.

Okay. Got it. All right. Maybe we can then talk about TransCon PTH in Europe for a little bit because you have a decision expected there in the near future. Just talk to us about some of the prelaunch activities that you have underway there. What are you doing to educate the market about your commercial infrastructure?

Just for explaining potentially the European approval process. In Europe, you first start with a positive opinion. That is the first step. And then you turn the positive opinion into an approval later. It takes about 50, 60, 70 days. When you get a positive opinion, at least in my case, I've never seen it not being turned into a final approval. But it's basically 2 steps. So basically to achieve the positive opinion is the key element in any approval process in Europe. We are in the late states, and we expect to get a positive opinion in the near future. The first country we will launch in will be typical Germany because you have what we call fast reimbursement. The patient population with hypopara in Germany is about 15,000 with the diagnoses of the disease. The basic are in a position, we believe, by going to different surveys that we believe that potential there is the 15,000 for the patients that are not diagnosed with the disease. We have initiated an ERP program in Germany, which are different compared to the U.S. ERP program because it's open both on in-patient but also for PTH experienced patients. Currently, we are enrolling patients in this program. And as soon as you're getting the approval of the program will automatic be stopped and then this patient will be turned into reimbursed patients. We have, for example, disclosed CKD data or data that defined how [ trying to ] PTH have a positive benefit on kidney function. And we did that analysis, mainly from the backup of the [ AMLOCK ] documentation. AMLOCK documentation Is basically the huge document you send into authorities related to your price discussion. And this documentation is important to show also the long-term benefit of our product. And we were really, really thrilled to see that a product like TransCon PTH basically could take 50% of the patient that have a diagnosed of [indiscernible] impairment and make them to have normal kidney function. We are really impressed to see that. And that is part of how we really are coming with a justification of our price structure in Germany as the first country. We will then enroll over in other European countries, and we're also building up our international operation that will take Rest of the World as to be sure where there is hyperpara patients, we would like to be. We would like to be in a position. We really can give them the benefit of this treatment everywhere.

Understood.

But what is perhaps more important? The first one would not be TransCon PTH, it would basically be SKYTROFA. We have seen the success of SKYTROFA [ in big lumps ] in the U.S. We have seen how we're providing a benefit to the patients. We have seen how we're penetrating the market, really building on the product strengths and we want to do the same thing in Germany. So in the next week, we're actually launching SKYTROFA in Germany, and we will do the same rollout first in other European countries, but also in international operation of our SKYTROFA. So this is the 2 products or, you can say, the launches we're starting within Germany.

And there's been some focus on how ex U.S. SKYTROFA launch dynamics could compare or contrast versus the U.S. launch dynamic that you saw a couple of quarters ago. What would your guidance be on how to think about the differences in the 2 markets and some of the nuances we should keep in mind when we compare the 2 launch trajectories?

My basic thinking -- my basic understanding is that pediatric growth hormone deficiency is the same as U.S. as in Europe and other places. Our product is performing in the same manner independent of ethnic background. The competitive landscape is the same. So my assumption will be that you will see on high level, the same market dynamic really play out as you saw in the U.S. And I believe I'm proud about SKYTROFA today. I'm proud about SKYTROFA coming out at the -- fulfilling the commercial goals we had for the launch in U.S. We wanted to have SKYTROFA to be leading brand in value but we didn't want to jeopardize the overall growth hormone market. We wanted to do it in the same manner where we build SKYTROFA to the leading brand in value but also grow the entire growth hormone market. And we believe that is justified because we're providing a much better treatment outcome compared to the daily treatment. And therefore, we believe that it's really is responsible to have a premium pricing for our treatment.

Understood. One topic on SKYTROFA outside of pediatric. So you have an adult GHD data set coming in the fourth quarter. Just help us think about what we can learn there and broadly speaking, how large of a commercial opportunity do you think adult GHD is for SKYTROFA?

Yes. We don't make SKYTROFA to the leading global brand in value without investment. And the key investment we already have done now was also disclosed in our Q2. We basically have built up global supply. We went up to large-scale manufacturing at [ onset ], huge investment of more than EUR 100 million. Just to take it up to last scale, it provided us 2 important element in our global strategy, global supply of drug soften, but at the same time, also much better improved cost. We want to be profitable as a company, and you do it by investing in generating profit on each single of your products. But we will also invest in further things. We're investing in label expansion. And the first one that will come is adult growth hormone deficiency is the key label expansion for us because first of all, you address another key primary endpoint than you do in many of the pediatric indication, which are linear growth. Here, you go out on body composition, a key parameter also for the pediatric segment, but we have that as a primary endpoint in our trial, the trial just to [ record ] 3 arm studies randomized 1:1, one placebo. One is going to be SKYTROFA and the other one is daily growth hormone because we want to show that we are at least as good as daily growth hormone because that is what the patients deserve. They need to have a much better treatment that at least get the same outcome that you see with daily growth hormone. That was why we made it as a 3 arm study. From a regulatory perspective, we just needed to be better than placebo, but we wanted to be quite sure we also are in a position that we can get the benefit at least what you see with daily growth hormone. It's a highly underpenetrated segment. And when we look on the penetration, we believe there is room really to grow the adult segment to a much larger population today. To our best estimate today in the U.S. market is 10% is about growth hormone deficiency. And we believe because of the penetration, less than 10% that is possible to grow that to a much larger segment. Scott, any key KPIs or any fundamentals you want to add?

I agree with all that. I think regarding the market size in general, I think again, as mentioned, our objective to grow the overall market and be the value leader. And you saw that with pediatric GHD, where we were the market leader for all growth hormones in the U.S. for Q2 with less than 10% of pediatric, which itself is less than half or about half of the existing market and then you layer on what Jan is saying about being able to grow the adult to a much larger population, we see SKYTROFA as a blockbuster product for sure.

Got it. Okay. Let me take a pause and see if there's any questions from the audience on either PTH or SKYTROFA. All right. Let's pivot to CMP then. I want to be able to touch on all of the components of the pipeline here before we close out. Admittedly, a tough question to answer without having your data in hand from your pivotal study. If the study works out according to your internal expectations, if it succeeds, where do you see TransCon be fitting in versus the other injectable therapy that's already approved out there and other competitive approaches that are being developed? Where do you hope for it to sit within the entire chondroplasia treatment paradigm?

So our vision, our target product profile is building on one single element providing a treatment to achondroplasia. And now we just talk about the achondroplasia because we believe TransCon CNP, together with our SKYTROFA, our once-weekly growth hormone product is the cornerstone in our future strategy to be the leading company in growth disorder because we control both the most important pathway in every growth disorder. But going back to our vision on achondroplasia, we want to provide a treatment, meaning is that we want to address the comorbidity. Addressing the comorbidity is more important for us than address linear growth. And this is why when we look on our IIb or Phase III trial, we just had regulatory interaction, both in U.S. We had regulatory interaction in Europe. We got the traditional way to measure linear growth, analyze height velocity over 1 year. That's the primary endpoint because that is established now as a primary endpoint. But the key element for us is to look on secondary input where we are in continued dialogue with regulatory agents both in Europe and U.S., how really to integrate and ensure that we can get the full treatment benefit of this. And we started for 3 years ago, our Phase II study. We are the only company that made a Phase II study over 1 year with placebo controlled and [ loyalty ] ascending doses. We did it because we did vesting on Phase 2 states. So basically, our Phase III is a copy of what we did in Phase II. We started with 53 patients and now 3 years after, we still have the same number of patients. And we were [ passioned ] with the impact we saw on this patient's life, the caregiver's feedback, the physician's feedback because we realized that the son, he came back and saying, after 1 to 2 months, we see major improvements. And we ask, that cannot really happen by linear growth. You cannot change the linear growth in just 1 or 2 months. And this is why we really went back and later use review of the literature and really found out that achondroplasia is also a muscular weakness disease because what we realized there saying it's suddenly the child can take on a bike, too. Then you saw biking, yes, that is natural for most children to do biking, but it was not natural for me. And this is because the lack of coordination, the muscle and everything like that. And this was how we really found out how we basically with our continuous exposure of CNP basically can address some of this integrated holistic view of how to treat achondroplasia. The other thing we got somewhere aligned in our regulatory interactions of the 100-microgram per kilo per week. We also got aligned the duration of the trial 1 year, the number of patients, and we enrolled all the patients in 4.5 months. How many trials have been enrolling as a Phase III in 4.5 months. We went to 90% of the site that basic had experienced with TransCon CNP. We went to 80% of the site have access to other treatment in [ achondro ] was still after 4.5 months of the patient. The other part, we built all this and integrated treatment regime. And one of the 2 other trials we are initiating now, one, we just filed for IND is our newborn study. We're going to newborn study because we believe if you need to address some element like spinal stenosis, you need to treat them from newborn because after 2 years, it's immersible. So some of these comorbidities, you need to start as early as possible. It's why we initiate a newborn study. At the same time, we're also initiating a combination study. If you believe you prefer just to have linear growth, but also at the same time, addressing comorbidity but want to have more linear growth. We, therefore, we're running a combination trial with SKYTROFA, taking achondroplasia, both new patients take them both on CMP and SKYTROFA or we take some of the CMP patients that already are on treatment and then adding in SKYTROFA. We will also run that trial next year. This is how we build up the holistic thinking about how really to treat optimal achondroplasia. But it only can happen because we have the 2 cornerstone products. We know from pediatric growth hormone deficiency, it's really difficult to have a daily treatment in any pediatric segment. That's why we made CMP upfront to be and once weekly dosing. But we mainly did it up from -- because we can provide continuous exposure of CMP to address both the growth disorder part, but also the massive weakness part of it. We will have an [ research state ] later this year where we'll come back and give you all the scientific explanation, the scientific review of all this and give you more data from our patients where everyone stays on now, everyone has been for at least 1 year on the highest dose, and we will give you some of the data from that [ basic point ].

Got it. Okay. Great. In the roughly 5 minutes we have, maybe you can just touch on some of the earlier-stage pipeline programs. I wanted to revisit TransCon RBZ. You had announced an ophthalmology program, I think, in January of this year. Just wanted to check in to see how that program is going, when we can expect to learn more on that new vertical that you're building out?

Yes. For us, it was basic to utilizing the TransCon technology in areas where we believe there is a huge unmet-medical need and we can use the same algorithm of product innovation that have been extremely successful in rare disease endocrinology. Think about we started with 3 rare disease endocrinology pipeline, preclinical and we manage basically hopeful to get all 3 approved in less than '25. We did the same thing with our ophthalmology, we used the same TransCon technology with a different carrier. We take basic consensus with the same as [indiscernible]. We're also taking one in the complement system and building up a pipeline. We also believe that we will not be an ophthalmology company, but we still can use a huge benefit to the patient, to the TransCon technology. So ophthalmology is one of the element that we will divest away from Ascendis Pharma because we will focus on really, really to be in a position that we will focus on our rare diseases, specially endocrinology. And this is where we really will focus our resources because we have the capability really to take product from the idea stage up to a patient based on a global scale.

Got it. Got it. Okay. You'd also mentioned with your 2Q update a new carrier technology and you chose a preclinical data with the GLP-1 analog. I have 2 questions for you there. One, I know the GLP-1 analog work you mentioned during your earnings commentary that decisions are still being made, the pipeline, they're still kind of being worked out, you'll have more updates for us in the future. But what are some of the scenarios that could result the type of work you could do there with GLP-1 analog? And then more broadly, what types of product candidates could this new carrier be used for beyond just GLP-1 based on what you've seen so far in your early stage evaluation of it?

Yes. So what was the reason for us to invest 2 years in expanding the TransCon technology? The reason for doing that, we came from the rare disease perspective, meaning is that often, you have not what we call huge, huge, huge volume to low, low cost you have in many of the primary care segment like diabetes, obesity and other things. But we have seen the huge benefit of the TransCon technology. And therefore, we wanted to take the TransCon technology and then add 2 important things to all the benefit of TransCon technology, but have it in such a way that it's really tailor-made to high-scale manufacturability that you do in obesity, diabetes product and other things like that. There are things we wanted to add in. They cannot have any major impact on cost, on manufacturing cost. And this is why we build up a new TransCon technology platform to accommodate these 3 elements. Keep the benefit of the TransCon technology, keep the benefit of having large-scale manufacturability, keep it not expensive for the product. And then we wanted to find a product where we want to show it, which are well known for a lot of people where there's a lot of basic knowledge about it and then we took semaglutide. We took semaglutide out from this idea that we know that if we can improve the GPL-1 to basic to dosing profile that providing the same peak to trough that you see in a weekly with a monthly, perhaps you can address the unmet medical need that 50% of the patients drop out in 1 year after first year treatment because you can make potential better tolerability for the patient. Instead of having that side effect every week, you can have one injection. The other way it could be positioned basic will be in when you want to initiate the treatment or want to have a high-dose treatment, you can take it on a weekly basis and you basically have flat continuous infusion because we know when you go from the trough to the peak, you often get the tolerability issue, and you will just have a flat curve every week for the time. And this is why we accepted with semaglutide, you can use whatever GPL-1 you want to use it. We can use it in cardiovascular diseases, we can use it in other places. But it gives us a way where we as a platform technology really open up for some of the segment we couldn't really address, but always established 2 platform technologies of TransCon technology.

Okay. Great. With that, we're actually at time. So let's go ahead and close it out. Jan, Scott, thank you so much for joining us.

Thanks so much for having us.

Of course. Thank you.

Thanks.